Purdue expert: Retailers see potential in early layaway programs

October 3, 2012

WEST LAFAYETTE, Ind. — Retailers' early and aggressive
layaway programs are a sign of their concern about the purchasing power of
lower-income consumers despite a generally positive outlook for this holiday
season, says Richard Feinberg, a Purdue University professor of consumer
sciences and retailing.

"Retailers are particularly worried about
lower-income consumers," Feinberg says. "And for those consumers, the
question is not what am I going to buy, but how am I going to be able to pay
for it. Any retailer that offers a way to do that will be rewarded."

Offering layaway earlier in the season also is key, he
says.

"By starting now, the retailer creates a longer time
frame to pay for layaway items," Feinberg says. "Anecdotal
conversations with consumers indicates that if given nine weeks of layaway,
many of them could buy items that they couldn't get if given only five weeks to
pay."

For retailers, the reward for offering a layaway program
isn't huge growth in sales over last year but a marginal increase, Feinberg
says. "A 1 percent increase or decrease in sales can mean millions of
dollars for a retailer. And if it's a move on the upside, that means money
denied to competitors."